Waving the Grexit Stick

Germany’s finance minister may be (southern) Europe’s most hated man – at home his approval ratings are going through the roof, even surpassing those of chancellor Angela Merkel. Pointing to the inner logic of eurozone rules he may have more in mind than the future of Europe’s single currency.

Watching Germany’s finance minister Wolfgang Schäuble of late in Berlin has been like watching a reborn Francis Urquhart, the irredeemably devious politician played by Ian Richardson in the original BBC version of the political drama “House of Cards”.

For the last two weeks, as the Greek bailout storm clouds returned, Schäuble has been sending out thunderbolts in all directions – electrifying Athens, Berlin’s EU partners, and even his own boss, Chancellor Angela Merkel. For the last five years she has counted on her flinty finance minister to negotiate tough EU-IMF bailout deals with crisis candidates, and then sell them at home to her increasingly skeptical Christian Democratic Union (CDU) MPs and voters.

But cracks have now appeared in Berlin’s most fascinating political relationship. It all began two Saturdays ago when, at yet another crisis meeting of euro finance ministers in Brussels, Schäuble launched a strategy Francis Urquhart called “putting the stick about”. His ministry circulated a paper to other euro finance ministers – and a German Sunday newspaper – that Greece should consider a “time-out” from the eurozone to restructure its unsustainable debts.

The ministry insisted that they were merely following the logic of failed bailout talks with Greece to its conclusion. But many of Berlin’s partners were horrified that the euro’s corner-stone member was, in effect, drizzling blood into the shark pool to see what would happen.

What happened was this: the “time-out” option never made it into the final roadmap to a third bailout, agreed 24 hours later after an all-night leaders’ summit in Brussels. Chancellor Merkel had intervened to take the Grexit stick from her finance minister. But, three days later, he was waving it about again in a curious broadcast interview. On Germany’s most influential radio show he said Greece had no future in the eurozone if it wants to restructure what most people view as an unsustainable debt burden.

Critics around Europe have decried his “time-out” proposal as a dagger to the heart of the currency union and European integration. Schäuble disagrees. Two decades after he devised the concept of a two-speed Europe in a 1994 paper, he has believed that keeping Greece on board, whatever the cost, is a sure-fire way to a no-speed Europe. However, loyal minister that he is, Schäuble left those concerns at the Bundestag door when German MPs voted last week to allow Berlin open talks with the Greeks on a third aid program. It was a bizarre piece of political theatre when, in a nod to Greek leader Alexis Tsipras, Schäuble made the case for the third program in which, on the radio a day earlier, he admitted he doesn’t believe.

Senior coalition figures in Berlin say that Schäuble has been “agitating” against further aid for Greece with CDU backbenchers for some time. In the Bundestag last week, however, he left it at reminding deputies that they will have another chance to vote on any actual program, some time in August. Then, if he wants to, Schäuble could sow a few more seeds of doubt about Greece’s eurozone future and recast the third bailout vote as a confidence vote in Merkel’s euro crisis strategy.

In a final masterstroke before his holidays, Schäuble put the stick about again in Der Spiegel, underlining his differences with his boss on Greece and floating the idea of a resignation. German ministers are primarily responsible to their office, he said, and no one can force them to act against their convictions. “If someone tried that, I would go to the president and ask to be discharged,” he said. Asked if he was thinking about such a step, Schäuble replied innocently: “No, how do you hit on that?”

It was classic Francis Urquhart: plant an idea in someone’s head and, when asked for more, say, “You might think that, I couldn’t possibly comment.” A day later, a flushed Angela Merkel insisted on public television that “no one had asked me to be discharged.” With that, the chancellor and her finance minister headed off on holidays and put some distance between them: Wolfgang Schäuble to the fresh North Sea breezes of Sylt, Angela Merkel south to the bombast of Bayreuth and on to the Dolomites.

And those of us in Berlin are left with a tantalizing question, like a great television cliffhanger: if push came to shove, and Merkel’s disagreement with Schäuble on Greece escalates, who would CDU deputies listen to more on a third bailout vote? Neither politician has deep roots in the back benches but, when Merkel thanked her finance minister for his “hours and endless hours” of work in the euro crisis last week, the sustained Bundestag applause for him was far more enthusiastic that any she’s ever earned in the chamber.

So what if, after 43 years in the Bundestag, the 72 year-old Schäuble has reached the end of the road and has decided to give Angela Merkel a kick on the way out to even an old score? Schäuble was once Helmut Kohl’s crown prince and, in 1998, his successor as CDU leader until both became ensnared in an illegal party donations scandal. Kohl refused to name his donors while Schäuble admitted that an arms lobbyist gave him an envelope containing 100,000 Deutschmark for the party coffers.

The scandal was enormous, the credibility of the party in tatters. Spotting her chance, Angela Merkel, then Schäuble’s number two, broke with him and her mentor Kohl to snatch the party leadership in 2000. It was five years before they worked together again, after Merkel invited her former boss to serve in her cabinet. As finance minister since 2009, Schäuble has become the most influential bailout negotiator in the Eurogroup of finance ministers – and one of the most loathed men in Europe.

But not so in Germany. His tough line on bailouts in general, and Greece in particular since 2012, has seen him nudge past Angela Merkel in opinion polls, with 69 percent popular support compared to her 68 percent. Just 21 percent of Germans are dissatisfied with the finance minister’s work, compared with Merkel’s figure of 28 percent. With his open campaigning against Greece staying in the eurozone, Schäuble is in good company. Neither Germany’s Bild tabloid, nor the conservative Frankfurter Allgemeine Zeitung (FAZ) broadsheet nor a who’s who of influential German economists believe that anything more can – or should – be done for Greece.

On Friday (July 24) the Handelsblatt business daily has made Schäuble its cover boy. Merkel may be the queen of hearts, but the Handelsblatt have crowned Schäuble the “Kanzler der Vernunft” – chancellor of reason, rationality, or sanity. Of course, after a decade in power, Angela Merkel remains at the peak of her powers; unassailable and beholden to no one. Almost.

Her one vulnerability might yet prove to be Schäuble, a man she needs now more than he needs her. If he decides he’s had enough of politics, enough of all-night crisis sittings in Brussels, enough of empty Athens promises, he could decide to depart the stage quietly. Or he could leave with a bang over Greece. Some 16 years after Angela Merkel humiliated him, Wolfgang Schäuble could yet return the favor.

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